REIT ETFs To Gain As Mortgage Rates Dip To 3.5-Year Low

Real estate investment trusts (REITs) witnessed a good run on the bourses over the past year. In fact, the S&P 500 Real Estate (Sector) Index has gained 16.5% in a year’s time. The latest slump in mortgage rates should provide a further boost to the sector. It is widely believed that declining mortgage rates helped the housing sector as lower borrowing costs are making new houses more affordable. Per Freddie Mac, hitting the lowest level since July 2016, the 30-year fixed mortgage rates currently stand at 3.45% compared with 3.51% in the previous week. Moreover, the 15-year average declined to 2.97% from 3%.

The new U.S. home sales surged to a 13-year high last December. U.S. housing starts spiked 16.9% to a seasonally adjusted annual rate of 1.361 million homes in December 2019, hitting a record high since December 2006. Also, there was a 3.6% rise in the existing homes sales to a seasonally adjusted annual rate of 5.54 million units in December 2019 (the highest since February 2018). Furthermore, existing home sales rose 10% year over year (read: Housing ETFs to Gain on Upbeat Sales Data).

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